Consolidated Media wins fight against Tax Office
CONSOLIDATED Media Holdings has won a fight against the Tax Office and will be able to book a $1 billion off-market share buyback deal with Crown Casino as a tax-effective dividend, rather than pay a capital gains tax bill on the deal.
CONSOLIDATED Media Holdings has won a fight against the Tax Office and will be able to book a $1 billion off-market share buyback deal with Crown Casino as a tax-effective dividend, rather than pay a capital gains tax bill on the deal.Late yesterday, three Federal Court judges upheld the appeal by Consolidated Media Holdings, which is more than 70 per cent owned by companies associated with James Packer and Kerry Stokes. Consolidated Media Holdings was formed when Publishing and Broadcasting Ltd broke into its media and gambling arms in 2007.It appealed against a Federal Court decision last year that backed the Australian Taxation Office's determination, which meant that the company was liable to pay tax on an assessable capital gain of $402.46 million. The tax dispute dates back to 2002 when Crown bought back 840 million ordinary shares from PBL, in the process returning $1 billion in funds that PBL had loaned.The ATO issued an assessment listing what it claimed was a capital gain for the 2002 year, and again for the 2005 tax year.But Federal Court judges Margaret Stone, Andrew Greenwood and John Logan said while they agreed with Consolidated Media's depiction of the deal, so different was its appeal that it would not allow it to claim the costs of last year's fight against the Tax Office."The way in which CMH case was developed before us differed markedly from the way its case was developed before the learned primary judge," they said. "His honour was pressed with forensic accounting evidence . . . we were not so pressed and it was the latter statutory construction submission [of the legislation] which proved decisive, not any acceptance by us that the primary judge had in some way erred in failing to prefer the accounting evidence which CMH led."During last year's Federal Court hearing, it emerged that the tax losses and other rebates available to Consolidated Media Holdings had completely offset the $339 million tax that would have been payable had it been classed as a dividend. It is not the end of Consolidated Media Holding's fight against the Tax Office, with BusinessDay reporting in 2010 another round of appeals against ATO assessments issued in previous tax years.